On4 Communications Inc (ONCI)

[JMcWhirter]

So why do public companies go private?

Being private frees up management’s time and effort to concentrate on running and growing a business with priority shifting from meeting quarterly earnings expectations to creating and building long-term shareholder wealth, as there are fewer regulations to comply with. Thus, the top management can focus more on improving the business’s competitive positioning in the marketplace.

Becoming and remaining private allows a more considerable degree of freedom for company management to embark on long-term, innovative, and higher risk ventures without the scrutiny of stock analysts, investors and the media, since the pressures of quarterly results do not bind a private company. Another reason for going private could be a buyout by a private company or a venture capitalist firm. By going private, the company’s shares will be delisted from the stock exchange and will no longer be traded in the exchange, so the company doesn’t have to deal with the volatility of the stock price. In return, the shareholders often get cash or stocks in a defined proportion.

Elon Musk had sent an email to Tesla employees and posted on its blog that the noise besieging Tesla is precisely why he wants to take its shares off the market, loosening up Tesla from some investor and media scrutiny in a year when it’s had some highly publicized struggles. “As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla,” he wrote. He also blamed the “quarterly earnings cycle,” which puts “enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term,” and a large number of short sellers “who have the incentive to attack the company.”

Also, as a private company undeterred by Wall Street’s 90-day attention span, it allowed Dell to boil down the priorities to just two metrics: cash flow and growth.

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Yes i had to google why companies would go private over public. I understand why they go Public but never really understood why the other direction. I found this Article above and it helped break it down in a unbiased way for me. Maybe it will help with others as well.